The Cabinet Committee of Economic Affairs (CCEA) on Tuesday gave an ‘in-principle’ nod for the coal pool pricing mechanism.

“The in-principle decision has been taken. There are some data that have to be put into these principles,” said Manish Tewari, Minister of State (independent charge) for I&B.

“The structure of the decision has been put in place. And the Ministries of Coal and Power would come back with the specifics. Basic principles and parameters have been identified. The plotting of real numbers has to be done,” Tewari told mediapersons after the more than two hours meeting.

The CCEA would again deliberate on the issue, he said.

Sources said that the members of the CCEA did not come to a conclusion on any of the options mooted by the nodal Coal Ministry.

The Coal Ministry has proposed a two-phased mechanism. First, the pass-through pooling should be applicable only to plants set up before March 31, 2009. Second, it should be applicable to all the units set up before or after March 31, 2009.

The Ministry also informed the CCEA that because of coal pool pricing the cost of coal would go up by Rs 172 for 2013-14 and Rs 193 in 2014-15. This would result in increase in cost of generation by 12-13 paise for every unit.

According to sources, the Coal Ministry also floated the idea that pricing mechanism should only be implemented on an experimental basis for the first two years. If further reviews are positive, it may be extended.

The question also arises that pool pricing would be beneficial to private power projects and would result in negative impact to units run by Centre or State-run companies, which are getting up to 90 per cent of their annual contracted quantity supplies.

Ashok Khurana, Director-General of the Association of Power Producers (APP) said approval of pool pricing would help the stranded power plants. APP would prefer that incremental cost of imported coal is absorbed over entire domestic production.

(This article was published on February 5, 2013)
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